The Hartford 2008 Annual Report Download - page 393

included in Level 3 classification for derivatives are customized equity swaps that partially hedge the U.S. GMWB
liabilities. Additional information on the customized transactions is provided under the “Accounting for Guaranteed Benefits
Offered With Variable Annuities” section of this Note 4. These derivative instruments are valued using pricing models
which utilize both observable and unobservable inputs and, to a lesser extent, broker quotations. A derivative instrument
containing Level 1 or Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has as least one
significant Level 3 input.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009